AIR 1967 SUPREME COURT 1634 ::1968 (1) Com LJ 68 ::1968 33 Com Cas 1 ::1967 Mah LJ 998 ::1967 MPLJ 937 ::1968 (1) SCJ 290 ::1967 2 SCWR 426

Supreme Court Of India

Hon'ble Judge(s): M. Hidayatullah, C. A. Vaidialingam , JJ

(A) Contract Act (9 of 1872) , S.126— Contract of guarantee - Liability of guarantor -Guarantor cannot be made liable beyond terms of his engagement - Enforceability of the guarantee also depends upon its terms. Whether a guarantee is enforceable or not depends upon the terms under which the guarantor bound himself. To this there are some exceptions. In case of ambiguity when all other rules of construction fail the Courts interpret the guarantee contra proferentem that is, against the guarantor or use the recitals to control the meaning of the operative part where that is possible. But whatever the mode employed the cardinal rule is that the guarantor must not be made liable beyond the terms of his engagement. AIR 1963 SC 746 (752) and AIR 1935 PC 21. (24), Rel. on.(Para 6) In the instant case though the guarantor bound himself to pay on demand the sum of Rs. 18,240.06 nP. only in the event of writ petition being dismissed, the guarantor put a limit on the guarantee. According to the last paragraph of the letter of guarantee the contract was to remain in force, (i) for one calendar month after the pronouncement of the judgment and or (ii) (a) a period of 12 months from the date of the execution of the guarantee whichever be later and or (b) the drawing and sealing of the order (as the Case may be) of the Supreme Court finally ....